US growing concern with digital yuan

US growing concern with digital yuan

Controlling the currency is in many aspects akin to controlling those who use it ?

For many decades the world’s finances have been following the American lead, with dollar being most popular reserve currency (60% of all allocated reserves), unit of account (e.g. all oil is quoted in dollars) and an international means of exchange.

This order stems from US’ Bretton-Woods promises to keep the world’s gold while giving other countries gold-redeemable dollars – for convenience. This promise was notoriously broken by Nixon in 1971, but by then it was already too late to change the status quo, so the US Federal Reserve got to keep its influence on every person or country holding dollars.

? This could change though. China successfully testing its digital yuan, a CBDC, and planning to implement it in cross-border payments could shake dollar’s dominance. CBDC is circulating within a Central Bank-controlled network (instead of a multitude of commercial banks), which means it can allow for much faster settlements, and China’s economic incentives to use it may further sway businesses and countries to use it internationally.

?Beijing 2022 Olympic Games could also play part in preparing e-CNY’s future, or at least that’s what US Senator Pat Toomey argues in his letter sent Thursday to the Treasury Secretary. He also urges the US to develop its own CBDC, disregarding the privacy threats that it could contain.

When it comes to China, however, privacy is treated seriously, with Senators and Congressmen ⚠️ warning the US athletes against using e-CNY, which could be used to surveil them both in China and at home.

This looks a lot like the beginning of a new currency war, with the winning country getting the upper hand in the world’s finances. With the new CBDC reality it could also get a peak inside private spendings of anyone holding it.

We at D.Center prefer another scenario – the one where money is independent, borderless and accessible to all. Bitcoin is apolitical, and this may well make it the most suitable currency for building a better world.

In the true Olympic spirit of “friendship, solidarity and fair play” ?